Disability insurance was created to ensure replaced financial income for an individual who cannot work. According to the American Council of Life Insurers, one-third of Americans between the ages of 35 and 65 will become injured for a period that is at least 90 days or longer. The ACLI also estimates one in seven workers will become disabled for more than five years. Disability insurance will replace part of the insured individual’s income if they are injured or become ill. Most people can obtain this type of insurance through an employer, association union, or an insurance broker.
There are several types of disability insurance and each type covers a different form of disability. Short-term disability insurance will help a person who has become sick or injured for a short amount of time. Long-term disability insurance will help someone who has become sick or injured for an extended period of time. Here is a list of the different types of disability insurance:
- Group v. Individual Insurance Policy - Any policy purchased through an employer must follow the Employee Retirement Income Security Act regulations. The ERISA is a federal law that sets the minimum requirements for pension plans and disability insurance plans. Certain group disability policies are exempt from ERISA. Most of the group plans will pay an injured or sick person a monthly benefit equal to 2/3 of the paycheck the person received before their injury or illness. These benefits will end when this person has reached the age to draw on Social Security benefits. Individual insurance policies must be purchased through an insurance broker. These policies are sold with specific monthly benefit amounts based upon the insured's income. This insurance can last as little as two years or for as long as a lifetime. Long-term disability policies usually define disability as the inability for an individual to go to work for 24 months. By not purchasing a disability insurance policy through an employer, the policy will be more expensive, but the insurance will generally offer better coverage and the policy holder should not be subject to ERISA guidelines.
- Social Security Disability - The U.S. Social Security and Supplementary Security Income disability programs are the largest of several federal programs that provide people with financial help if they are disabled. Both of these are administered by the Social Security Administration. An individual must meet certain criteria in order to qualify. If you are insured, Social Security disability benefits will pay you and a few members of your family. You must have worked for a certain amount of time and paid a certain amount in Social Security taxes in order to become insured. One of the factors analyzed here is the number of work credits the claimant has. Supplemental Security Income gives benefits to people based on their financial needs.
- Workers’ Compensation - Workers’ compensation offers benefits to employees who can no longer work because of an injury they sustained on the job. Workers' compensation will also pay for the economic loss, reimbursement of medical expenses, general damages for pain and suffering, and benefits to the dependents of the injured worker. Employers in North Carolina with three or more employees (some exceptions apply) are required to carry a workers' comp insurance policy. Workers' comp benefits are regulated by the North Carolina Industrial Commission.
- Veterans Benefits - There are several types of insurance policies provided to military veterans by organizations such as the U.S. Department of Veterans Affairs. The overall compensation system involves more than just one type of insurance. It includes health insurance, disability income insurance, life insurance, and mortgage insurance.
It is possible for an individual to draw on more than one of the types of disability insurance options outlined above. Some income limitations apply. Our disability attorneys in Raleigh, Cary, and Fayetteville help residents across the state understand and move forward with claims. Our initial consult is always free. Call 877-BRENT-ADAMS or complete an online case evaluation request.